In re Milo's Kitchen Dog Treats Consolidated Cases.
MEMORANDUM OPINION AND ORDER ECF No. 101
MAUREEN P. KELLY, Magistrate Judge.
This consolidated action, merged solely for the purpose of pretrial proceedings, is comprised of four cases brought against Defendants Milo's Kitchen, LLC ("Milo's") and Del Monte Corporation d/b/a Del Monte Foods ("Del Monte") (collectively, "Defendants"), which manufacture, market, distribute and/or sell chicken jerky dog treats. The four individual cases have been brought by customers who purchased the treats and whose dogs became sick and/or died after consuming the treats.
On August 8, 2013, Defendants filed a Third Party Complaint, ECF No. 78, against Nova World, Inc. ("Nova World"), alleging that, pursuant to a Supply Agreement entered into between Del Monte and Nova World, Nova World was the exclusive manufacturer of the chicken jerky dog treats sold by Del Monte and that Nova Worlds breached the Supply Agreement by failing to manufacture the product in accordance with the terms set forth therein. Nova World filed a Motion to Stay Action as to the Third-Party Complaint of Del Monte Corporation and Milo's Kitchen, LLC and Compel Arbitration Pursuant to the Federal Arbitration Act ("the Motion"), ECF No. 101, on October 17, 2013, which is presently before the Court. For the reasons that follow, it is respectfully recommended that the Motion be granted.
I. STANDARD OF REVIEW
In deciding a motion to compel arbitration, the inquiry, like that in deciding a motion for summary judgment, is whether there is a "genuine issue of fact concerning the formation of the agreement' to arbitrate." Kirleis v. Dickie, McCamey & Chilcote, P.C. , 560 F.3d 156, 159 (3d Cir. 2009), quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co. , 636 F.2d 51, 54 (3d Cir. 1980). Only where no such issue exists should the motion be granted. Id. "In making this determination, the party opposing arbitration is entitled to the benefit of all reasonable doubts and inferences that may arise.'" Id.
It is undisputed that the Supply Agreement at issue contains an arbitration clause which provides that:
MEDIATION AND ARBITRATION: If any dispute or disagreement arises between the parties in respect of this Agreement, they must follow the procedures set forth herein. The party claiming that such a dispute exists must give notice in writing ("Notice of Dispute") to the other party of the nature of the dispute. Within ten (10) days of issuance of the Notice of Dispute, representatives of the parties must meet in a good faith effort to resolve the dispute. If any dispute remains unresolved twenty (20) days after issuance of the Notice of Dispute, then either party may demand that such dispute be resolved by binding arbitration conducted in accordance with the Rules for Commercial Arbitration of the American Arbitration Association ("AAA"), as amended from time to time. Arbitration shall take place before a single arbitrator mutually selected by the parties, and the prevailing party shall be awarded its costs and reasonable attorneys' fees. The place for arbitration shall be San Francisco, California. In the event the parties are unable to reach agreement on an arbitrator within fifteen (15) days of a demand for arbitration made by one party to the other, the AAA shall select the arbitrator upon application by either party.
ECF No. 78-3, p. 20, ¶ 20.
Nova World contends that because the claims raised by Defendants in the Third-Party Complaint are premised on allegations of malfeasance by Nova World under the Supply Agreement, they are "in respect of" the Supply Agreement and covered by the arbitration clause. Accordingly, Nova World argues that Del Monte is obligated to arbitrate its claims and should be compelled to do so by this Court pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.
The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. ("FAA"), creates a body of federal substantive law establishing and governing the duty to honor agreements to arbitrate disputes.... In particular, the FAA provides that as a matter of federal law "[a] written provision" in a maritime or commercial contract showing an agreement to settle disputes by arbitration "shall be valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract." 9 U.S.C. § 2.
Century Indem. Co. v. Certain Underwriters at Lloyd's, London , 584 F.3d 513, 522 (3d Cir. 2009) (internal citations omitted). Although there is a strong federal policy favoring arbitration, the FAA nevertheless requires the court to first determine: (1) whether the parties entered into a valid agreement to arbitrate; and (2) whether the dispute at issue falls within the scope of that agreement. Id. at 523, citing Kirleis v. Dickie, McCamey & Chilcote, P.C. , 560 F.3d at 160.
In this case, Defendants do not dispute that the arbitration clause contained in the Supply Agreement is valid and enforceable. They do dispute, however, whether the claims raised in the Third-Party Complaint fall within the scope of the Supply Agreement and thus whether they are subject to the arbitration clause. In particular, Defendants argue that the language requiring that only disagreements arising "in respect of this Agreement" be arbitrated must be narrowly construed, and that the dispute in this case - whether the chicken jerky treats were contaminated or otherwise defective - have nothing to do with the Supply Agreement. The Court disagrees.
First, Defendants have not provided the Court with any authority, nor has the Court uncovered any, to support their position that the language "in respect of this Agreement" should be construed any more narrowly than language typically found in arbitration clauses, i.e., that it covers disputes "arising out of or relating to" the agreement. Rather, Defendants simply conclude that "arising out of or relating to" reflects the parties' intent to submit all disputes to arbitration while "in respect of this Agreement" indicates the parties intent to arbitrate only a limited number of disputes. Defendants' argument appears to be based on the mere fact that the language differs. The fact that the language is not identical, however, does not ...